United Nat'l Maint., Inc. v. San Diego Convention Ctr. Corp.
| Decision Date | 05 September 2012 |
| Docket Number | Civil No.07cv2172 AJB |
| Court | U.S. District Court — Southern District of California |
| Parties | UNITED NATIONAL MAINTENANCE, INC., a Nevada Corporation, Plaintiff, v. SAN DIEGO CONVENTION CENTER CORPORATION, INC., a California Corporation, Defendants. |
MOTION FOR A PERMANENT
INJUNCTION
Plaintiff United National Maintenance, Inc ("United") filed a Motion for a Permanent Injunction enjoining Defendant San Diego Convention Center, Inc. ("SDC") from enforcing an exclusive policy which a federal jury unanimously found to be an intentional interference with contracts between United and its customers Global Exposition Services, Inc. ("GES") and Champion Exposition Services ("Champion"). The Defendant filed an opposition and the Plaintiff filed a reply. The hearing on the motion was held on July 1, 2011 before Judge Battaglia. James Lance appeared on behalf of the Plaintiff. Jacob Slania, John L'Estrange, Joseph Ergastolo, and Andrew Schouten appeared on behalf of the Defendant. Based upon the parties' moving papers, arguments made during the hearing, and for the reasons set forth below, the Plaintiff's motion is hereby DENIED.
This action arose in response to the Cleaning Services Policy established by SDC on July 1, 2007, that required all cleaning services at trade shows at the San Diego Convention Center be performed exclusively by SDC's in-house cleaning staff. Prior to July 1, 2007, these services were either performed by SDC's in-house cleaning staff or, at the trade show decorator's option, outsourced to vendors like United. In its Complaint filed on November 13, 2007, United challenged the Cleaning Services Policy in four claims: (1) actual monopolization, under section 2 of the Sherman Act; (2) attempted monopolization, under section 2 of the Sherman Act (); (3) intentional interference with contract; and (4) intentional interference with prospective business relations. (Doc. No. 1).
The case proceeded to trial on March 21, 2011. United sought both economic damages and injunctive relief. SDC denied all of the alleged antitrust violations and the contract claims and asserted affirmative defenses based on United's failure to mitigate damages as well as business justification and immunity from liability for the antitrust claims under the Local Government Antitrust Act and the State Action Doctrine.
After a lengthy trial, the jury returned a verdict for United on the Intentional Interference with Contract Claim on May 4, 2011. In the special verdict form (Doc. No. 219) the jury found:
Based on these findings, the Jury awarded United $668,905. The jury could not reach a verdict on the other claims, and a mistrial on those claims resulted. In the instant motion, United seeks a permanent injunction in order to enforce the jury's verdict on the contractual interference claim. (Doc. 240-1.)
As a preliminary matter and in light of the Court's rulings granting SDC's motion for judgment as a matter of law, [Doc. No. 239-3], and granting in part SDC's motion for new trial, [Doc. No. 239-1], the Court finds the instant motion to be moot. However, since the parties have made it clear that they intend to appeal the Court's rulings on these motions, the Court will out of an abundance of caution, address the instant motion on the merits.
Although a district court may exercise its discretion to grant a permanent injunction where the plaintiff has prevailed on the merits of a cause of action and where equitable relief is appropriate, "an injunction is a matter of discretion [and] does not follow from success on the merits as a matter of course." Winter v. Natural Res. Def. Council, 555 U.S. 7, 32 (2008) (citing Weinberger v. Romero-Barcelo, 456 U.S. 305, 311-12 (1982)). Thus, the fact that United prevailed on the intentional interference with contract claim at trial does not mean that it is automatically entitled to a permanent injunction. In resolving this matter, the Court must ensure that issuing a permanent injunction would not deprive SDC of its constitutional right to a jury trial.
The Seventh Amendment of the Constitution provides that "in suits at common law where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved." U.S. CONST. amend. VII. The Supreme Court has long emphasized the importance of preserving a party's right to jury trial. See, e.g., Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 508-11 (1959); Scott v. Neely, 140 U.S. 106, 109-10 (1891); Parsons v. Bedford, Breedlove & Robeson, 28 U.S. 433, 446 (1830). While a party has the right to a jury trial on the merits of legal claims, no such right to a jury exists for equitable claims. Dollar Sys., Inc. v. Avcar Leasing Sys., Inc., 890 F.2d 165, 170 (9th Cir. 1989).
Resolving a request for injunctive relief presents no constitutional problems as long as the legal and equitable issues are distinct. Danjaq LLC v. Sony Corp., 263 F.3d 942, 962 (9th Cir. 2001). However, when the legal and equitable issues overlap such that the same evidence supports both issues, "the district court must take care not to impinge on the right to a jury." Id. Because the issuance of a permanent injunction is a final order, Golden Gate Hotel Ass'n v. City & County of San Francisco, 18 F.3d 1482, 1483 (9th Cir. 1994), it carries res judicata effect that will preclude the parties from relitigating a subsequent legal claim where common issues exist between the equitable and legal claims. Ross v. Bernhard, 396 U.S. 531, 537-38 (1970); Calnetics Corp. v. Volkswagen of Am., Inc., 532 F.2d 674, 690 (9th Cir. 1976) (citing Heyman v. Kline, 456 F.2d 123, 130 (2d Cir. 1972)). Thus, in order to preserve a defendant's right to trial by jury, the court must first resolve the legal claims arising out of the same facts as the equitable claims. Danjaq, 263 F.3d at 962; Dollar Sys., 890 F.2d at 170; Trans-World Int'l v. Smith-Hemion Prods., 952 F. Supp. 667, 673 (C.D. Cal. 1996).
United seeks a permanent injunction to enforce the jury verdict in its favor on the intentional interference with contract claim. Despite the jury resolution of this claim, the remaining three mistried claims await possible retrial. United argues that a permanent injunction should issue on the intentional interference with contract claim simply because the elements of that claim differ from the elements of the three antitrust claims. However, in order to preserve SDC's right to jury trial, the Court cannot issue a permanent injunction if there are common factual issues shared by the claim resolved by the jury and the three claims awaiting possible retrial. See, e.g., Ross, 396 U.S. at 537-38; Calnetics, 532 F.2d at 690.
The intentional interference claim shares the same factual support as the three mistried claims. First, all four claims at issue concern the effect of the Cleaning Services Policy on United, allege the same set of underlying facts, and require the same proof. (Complaint ¶¶ 70, 81, 97, 103.) For example, United introduced invoices corresponding to its written and oral contracts under both interference claims in order to establish booth and facilities cleaning rates, market data, business relationships, and damages on the antitrust and interference claims. (Exh. 556.) Moreover, during trial, United's counsel argued that the structure of the rights and relationships at issue in the contract interference claim proved that theSan Diego Convention Center was an "essential facility" as alleged in the monopolization claims. (4/20/11 Trial Tr. 100:13-23.)
Second, the two interference claims share essential elements. Throughout the trial, United presented evidence of the terms in the written contracts for the contract interference claim and then later used the same terms of the same contract for the prospective economic advantage claim. (3/28/2011 Trial Tr. 100:16-20.) As the Court recognized in ruling on SDC's Rule 50(a) motion, evidence of damages as presented by expert witness Patrick Kennedy leads to the inference of actual disruption of United's contracts as well as its economic advantages. (4/07/2011 Trial Tr. 67:4-25; 80:4-16.)
Third, in response to SDC's Rule 50(a) motion, United argued that SDC's exercise of its property rights demonstrated monopoly power. (04/07/2011 Trial Tr. 77:10-17.) United argued that because of the anti-competitive conduct at issue in the two antitrust claims, SDC's licenses and policies were void as an unlawful exercise of monopoly power and not property rights. (04/07/2011 Trial Tr. 77:10-17.) The Court agreed with United that any exercise of property rights or first tier contract rights by SDC would be unlawful if it were proved to be anti-competitive. (4/07/11 Trial Tr. 79:18-80:21.) Later, in United's closing argument, United combined the antitrust claims with the contract interference claim by arguing that SDC's reservation of rights demonstrated that the San Diego Convention Center is an essential facility and that SDC had monopoly power in the relevant market. (04/20/11 Trial Tr. 47:1-52:8; 100:13-23.)
According to United's theory of the case and presentation of the facts, the contract interference claim is...
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